Last week, the Federal Reserve Bank of Dallas issued a special report, Financial Stability: Traditional Banks Pave the Way, calling for an end to "too big to fail" policies and proposing that traditional banking models are the only hope for a recovery of confidence in the American banking system.
In his introduction to the report, Richard Fisher, President and CEO of the FRB Dallas, offered thought-provoking analysis of the industry's current status, and asked questions of its future: "When it comes to our financial sector, we've seemingly stumbled into a place where we never wanted to be. Just as disturbing, we don't know how to get out. Do we simply accept that big banks will get bigger? Do we try to rein in their excesses through all-encompassing regulation, even if it risks burdening small and medium-sized banks that had little to do with the financial crisis? Or do we dedicate ourselves to creating a diverse financial system in which no bank is too big to fail?"
The report consisted of five essays, penned by Dallas Fed economists, on the theme of rethinking America's banking system. Each part can be found here: